Des Moines, Iowa-based MidAmerican said it plans to cut by half the 5 percent cap on any electric delivery rate increase request filed by BGE in 2009. It also would not request an increase in electric and natural gas distribution rates until January 2011.
That means BGE customers would not see an increase in gas and electric delivery rates in 2010 and the first half of 2011, resulting in a potential savings of as much as $70 million during that period, according to MidAmerican.
"We always start with customers; our first focus is to deliver significant benefits to them," Abel said. "There's a clear savings by implementing the proposal we have and then, secondly, it brings a great deal of rate certainty to customers. In this difficult time, that's very important."
BGE charges customers rates for delivering electricity and gas. The delivery charge of 2.4 cents is a small portion of the total 14 cents per kilowatt hour that BGE households pay for electricity. Likewise, the gas delivery charge is a small portion of the total bill.
The bulk of the costs for electricity and natural gas that customers pay are largely set by a deregulated energy market. Rising energy prices have been a source of concern for Maryland residents during the past several years. Combined with previous rate increases, BGE's residential customers are paying 85 percent more for electricity than they were before deregulation was passed in 1999.
Democratic Sen. Jim Rosapepe of Prince George's County said yesterday that the PSC should not approve the deal because it's not in the best interest of Maryland ratepayers. He described MidAmerican's proposal as "pennies" in savings for ratepayers.
"Gov. [Martin] O'Malley got $350 million for ratepayers and they're talking about $70 million over three years," Rosapepe said, referring to a recent settlement between the state and Constellation that in part provided a $170 one-time credit to customers. "It's peanuts. I don't think ratepayers will be fooled by it. The big issue here is the state is going to craft a deal that is good for BGE ratepayers."
PSC Chairman Douglas Nazarian declined to comment on the application submitted by Constellation and MidAmerican. The state's energy industry regulator has six months to review the transaction.
In its application, MidAmerican reiterated its pledge that BGE would remain in Baltimore. Abel said MidAmerican would continue BGE's charitable contributions at no less than the three-year average of $2.9 million annually through Dec. 31, 2013.
